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Sprint and Nextel Cell Tower Lease Renegotiations

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Now that Sprint and Nextel have received approval from the FCC, DOJ and their shareholders to merge, they are in the process of determining where they have redundancy in their operations. One of the main areas where they are looking to reduce expenditures is the land costs of cell towers. For some wireless carriers, the cost of land is one of their largest operating expenses. Sprint is currently evaluating all of its cell sites, looking for redundancy. Recent estimates are showing that approximately 5,000 duplicative sites will be terminated..

To that end, many landowners have started to receive letters from one of a few organizations that is working for Nextel and Sprint to evaluate and terminate those cell towers and cell tower ground leases that are no longer needed. The letters basically offer a short guarantee on the lease in exchange for the owner reducing the ground rent by 30-75% and agreeing to no increase in the lease over time. Many times, there is an offer by Sprint to “buy” 15 years of the lease for around 5 years worth of rent.

The “offer” if you can call it that, comes with the veiled threat that if the landowner does not comply, the lease will be terminated and the landowner will lose all revenue from his Nextel cell tower lease or his Sprint cell tower lease. There is a veiled threat that if the landowner does not comply, the lease will be “too expensive” to maintain and as such may be terminated.

In some cases, Nextel and Sprint are intent on terminating the lease and only a reduced rate and extended term can save the lease. This occurs when there actually is overlap and one of the sites is redundant. In other cases, Sprint is bluffing and trying to scare the landowner into reducing the rent on a site that was never slated to be terminated.

Unfortunately, Sprint has chosen to use third party companies to do the renegotiations and it is difficult to get anything out of the agent’s for that company. The agent’s are working in a call center, reading off a script and know less than the landowner about the cell tower business. They work off of high pressure sales techniques that they have refined against hundreds of Cingular and AT&T tower owners.

But you can even the playing field. Ask the agent what site they would be consolidating this equipment too. Chances are they won’t or can’t tell you. One landowner suggested that he was told by Sprint’s agents to get in his car and drive around. Ask them why your site was chosen and how many other sites were chosen in your area. Chances are again that they won’t or can’t tell you. Ask questions- and keep bugging them until they answer you.

Finally, if you find that you cannot determine if they are bluffing or not, consider retaining the services of a consulting service like Steel in the Air. In most cases they can review your location, determine if there are any redundant sites, and if there are redundant sites, help you determine if negotiations would even help.

Please see their page on the subject for more information.

Both Sprint and Nextel are copyrighted names. Cell Tower Info.com and Steel in the Air have no relationship to either of these companies.